Oppenheimer Downgrades FARO Tech On Lack Of Near-Term Catalysts

• Shares of FARO Technologies, Inc. FARO were down more than 30 percent on Wednesday.
• The decline followed a huge earnings miss on Tuesday evening.
• Oppenheimer analysts Holden Lewis and Kristen Owen downgraded the stock from Outperform to Perform.

In a report issued Wednesday, analysts at Oppenheimer downgraded shares of FARO Technologies from Outperform to Perform on some worrying information heard at the earnings call. “Specifically, relative weakness in scanners not only removes the secular growth catalyst in the short term, it also boosts the cyclical bits of the mix just as end market demand is slowing,” the analysts explained. In addition, management transition may put the prospect for strategic acquisitions on pause.

“These catalysts are dormant, not dead, but it may be several quarters before they drive the story, justifying our more cautious rating,” the firm said.

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Lewis and Owen decided to revise their estimates for the company on softened macro conditions. They now expect 2015E EPS of $0.50 (down from $1.25), 2016 EPS of $1.25 (down from $1.80), and 2017 EPS of $1.65 (down from $2.40).

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.